Wear v. Selective Ins. Co.
190 A.3d 519
N.J. Super. Ct. App. Div.2018Background
- Woodbury Medical owned an office building where RN Theresa Wear alleged workplace injuries from exposure to mold and HVAC filter fragments; her husband asserted a per quod claim.
- Selective insured Woodbury Medical under a commercial policy that included a broad fungi/bacteria exclusion with anti-concurrent and anti-sequential language and a definition expressly covering mold.
- Selective denied coverage and refused to defend based on the exclusion; Woodbury Medical sued for a declaratory judgment and moved for partial summary judgment to compel Selective to defend.
- The trial court ordered Selective to defend and pay attorneys’ fees; Selective unsuccessfully sought interlocutory review and declined to comply with payment orders.
- The Wears obtained a $300,000 arbitration award against Woodbury Medical and then Woodbury assigned its coverage rights to the Wears; the trial court later found the settlement lacked good faith and denied enforcement under Griggs.
- On appeal this court reversed parts of the trial-court rulings, holding it was premature to compel Selective to defend given the exclusion’s anti-concurrent language, vacating Griggs-based enforcement, and remanding for coverage determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Selective have a duty to defend given the complaint alleged mold plus other environmental causes? | Woodbury: complaint alleged alternative non-mold environmental causes, triggering duty to defend. | Selective: complaint alleged mold as a cause; the fungi exclusion (anti-concurrent/anti-sequential) bars coverage even if other causes contributed. | Duty to defend was premature to compel; exclusion’s anti-concurrent language meant coverage not clearly implicated, so duty should convert to reimbursement pending coverage resolution. |
| Is the fungi/bacteria exclusion ambiguous and thus inapplicable? | Woodbury: exclusion should be narrowly read to permit defense when alternative causes alleged. | Selective: exclusion is clear and bars claims where mold contributed in any part. | Exclusion unambiguous; plain reading excludes losses if mold is any causative factor regardless of other causes. |
| Was Griggs applicable to enforce the Wears’ settlement/assignments against Selective? | Wears: Selective’s refusal to defend triggered Griggs liability for the settlement judgment. | Selective: its coverage denial was a good-faith coverage dispute; no wrongful refusal to defend. | Griggs inapplicable because there was no proven wrongful breach of duty to defend; insurer’s good-faith coverage dispute precludes Griggs relief. |
| Were trial-court awards of fees/costs for failure to comply with defense orders proper in scope? | Woodbury: sought fees for defense costs and related work resulting from Selective’s noncompliance. | Selective: contests extent and basis for fee awards tied to premature defense order. | Award for fees tied to Selective’s refusal to comply was reasonable, but on remand Woodbury’s recoverable fees are limited to those incurred enforcing litigant’s rights (not full defense fees premised on an ordered defense). |
Key Cases Cited
- Griggs v. Bertram, 88 N.J. 347 (Sup. Ct. 1982) (insurer who wrongfully refuses defense may be liable for judgment or settlement if reasonable and in good faith)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (duty to defend is determined by comparing complaint to policy; insurer must defend when coverage cannot be decided from complaint)
- Passaic Valley Sewerage Comm'rs v. St. Paul Fire & Marine Ins. Co., 206 N.J. 596 (2011) (good-faith coverage challenge does not breach duty to defend)
- Grand Cove II Condo. Ass'n, Inc. v. Ginsberg, 291 N.J. Super. 58 (App. Div. 1996) (where coverage is mixed, duty to defend may convert to duty to reimburse)
- New Jersey Manufacturers Ins. Co. v. Vizcaino, 392 N.J. Super. 366 (App. Div. 2007) (disputes over coverage should protect insurer and insuredboth rights; insurer need not assume defense when evidence indicates claim is not covered)
- Fireman's Fund Ins. Co. v. Security Ins. Co. of Hartford, 72 N.J. 63 (1976) (discusses insurer obligations and good-faith duties in defense/coverage disputes)